The consequences of an analog compliance strategy in renewable energy project finance
Compliance teams play a painstaking but critical role in the energy transition. Your work exists at the intersection of a project’s or portfolio’s internal and external stakeholders, ensuring renewable energy project financing adheres to all legal and regulatory standards. Through meticulous data gathering and detailed reporting, you keep projects and portfolios both viable and profitable, and prove time and again the value these investments can bring.
Compliance teams face a complex challenge. Different projects and portfolios bear different reporting requirements. Even for the same project or portfolio, executives, lenders, project sponsors, and external auditors each require a different set of compliance reports tailored to their needs — dependent on agreement obligations and local or federal market requirements.
Current analog compliance processes require vast amounts of time and effort to search for and report on project and financial performance. This way of working is out of step with the future project financiers envision: In Banyan Infrastructure’s 2025 Project Finance Software Report, two-thirds of survey respondents said growing their portfolio was their primary goal this year. Scaling compliance efforts across multiple projects and portfolios increases the workload for compliance professionals attempting to keep up with each stakeholder’s requirements, leaving the potential for error.
Whether you’re a compliance professional managing obligations for a private fund or a bank with catalytic funding, streamlining information gathering, reporting schedules, and report generation is key to ensuring your organization meets all its compliance requirements.
Imperfect analog compliance tracking
Renewable energy funds, like any investment portfolio, must remain in compliance with the obligations set out in investment agreements. As portfolio compliance professionals, you must have uninhibited access to several sources of information — from asset management data tracking the output of renewable energy systems to financial information related to offtake agreements to cash flow waterfalls describing the financial flow of cash, revenue, and expenses — to properly ensure compliance.
Current internal analog systems keep information siloed in each of the organization’s functional areas, sending compliance teams on a chase for data as each deadline approaches. Time spent searching files or tracking down colleagues for necessary information is not only inefficient, but also risky — it leaves the possibility of missing key information on a particular project that can lead to payment delays and cash flow issues.
Siloed compliance professionals hit roadblocks due to the single-person risk that analog strategies impose. Should the single portfolio or asset manager who holds the information required for a compliance report be unavailable, compliance professionals have no choice but to wait for their availability to gather information. This ineffective system opens the possibility of missing deadlines while awaiting key information.
Beyond the consequences analog compliance strategies pose in the information gathering process, these inefficient processes also impact obligation timelines. Some stakeholders may require monthly reports while others require quarterly, and each may have a different timeline for compliance reporting on incoming project performance data. With an analog strategy, compliance teams must keep manual calendars to track due dates and complete the tedious process of manually backcasting internal tasks to ensure timely delivery. This exposes compliance teams to a wide range of potential errors. After all, you are only human — and keeping track of each reporting schedule manually leaves plenty of room for error as you juggle a growing number of obligations.
Once a compliance team has overcome these hurdles to gather reporting data on time, there remains the task of compiling the report in a format that each stakeholder can digest. You might spend hours on document formatting and data processing to ensure reports are clear, accurate, and easily digestible.
Multiply this effort by any number of projects under your team’s purview, and compliance professionals struggle to keep up with the complex set of obligations and timelines that ensure loans and investments are in compliance.
A better way to meet compliance requirements
Much like the energy world is moving towards new, renewable technologies, project finance professionals are discovering better ways to drive efficiency in compliance workflows. Purpose-built software can play an important role in automating and streamlining reporting and compliance management.
Digitization is the process of connecting all data sources and information pertaining to a fund and making it accessible within the same system. Not only is digitized information readily available in a secure location on the cloud, but it is accessible within the same platform instead of separate files, making searching for data easy.
With digitization, compliance professionals avoid the pitfalls of analog project finance like single-person risk, inaccurate manual reporting, and time-consuming data collection. The ongoing, automatic update of digital data also allows for continuous compliance tracking so that managers are aware of potentially out-of-compliance projects as early as possible without having to wait for serious issues to arise like a missed payment.
Once portfolio data is digitized and accessible, the door opens for automation. For compliance professionals, this means auto-generated custom reports in pre-built dashboards and documents, saving hundreds of hours in the information gathering process as well as final presentation. Notifications for each reporting due date are auto-populated so that no compliance report misses a deadline again.
Digital Transformation with Banyan Infrastructure
As former project financiers, we built project finance digitization and automation systems because we know first hand the challenges that arise from analog compliance workflows.
Purpose-built software takes the legwork out of compliance reporting by providing teams with specialized tools and auto-generated reports built into the platform. With Banyan, project- and portfolio-level data is digitized to ensure all information is readily available and easy to assess. Banyan Infrastructure alerts provide timely reminders to ensure teams stay on top of compliance reporting deadlines.
Are you ready to elevate your compliance reporting strategy? Reach out to Banyan today for more information.